Canada Trust Co v Stolzenberg

A court may order production of documents to help determine whether it has jurisdiction, even though its substantive jurisdiction is disputed. The inherent jurisdiction to decide the existence and limits of the court’s jurisdiction is distinct from jurisdiction to try the action.

Under Order 38 Rule 13, relevance is tested by the issues in the proceeding for which production is sought, including a jurisdiction challenge. The applicant need show only that the documents may be necessary. The discretion remains exceptional: the court should require a clear demonstration of necessity, weigh the risk of injustice, and avoid turning the hearing into a mini-trial.

The plaintiffs, Canadian trustees of pension funds, alleged a complex international fraud and brought proceedings in England against the first defendant and others. The English jurisdiction depended on the first defendant’s domicile in the United Kingdom and on the validity of service.

Service was delayed while protective orders were obtained in several jurisdictions. The defendants then applied to set aside service for want of jurisdiction. The plaintiffs sought orders under Order 38 Rule 13 requiring third parties to produce documents capable of proving the first defendant’s address and domicile at the relevant time.

Rattee J refused the application, treating it as an inappropriate attempt to establish jurisdiction through the court’s process. The central issue was whether such production could properly be ordered before substantive jurisdiction had been established.

The appeal was allowed unanimously. The order refusing the plaintiffs’ application was set aside and the application was restored for rehearing by Rattee J. The Court of Appeal did not exercise the discretion itself. The costs of the appeal were awarded to the plaintiffs, and the costs below were made costs in the rehearing.

1. Jurisdiction to determine jurisdiction. Millett LJ distinguished between jurisdiction to try the substantive action, which depended on the Civil Jurisdiction and Judgments Act 1982 and the Brussels Convention, and the inherent jurisdiction to determine whether that substantive jurisdiction existed. The latter jurisdiction was indisputable. Its exercise did not assume that the court had jurisdiction to try the action.
2. Production before jurisdiction is established. The court’s process was therefore available to order production at a hearing of the defendants’ jurisdiction application. The so-called bootstrap argument confused the two jurisdictions.
3. Relevance and necessity. The relevance of documents sought under Order 38 Rule 13 had to be tested by reference to the issues in the proceeding for which they were required. Order 38 Rule 13(2) was read as referring to documents which could be compelled if that proceeding were the trial of the cause or matter. Documents relevant to the jurisdiction application could therefore be ordered even though domicile would not be an issue at the trial of the action. The applicant need not concede that its case must fail without the documents; it was enough that the documents might be necessary.
4. Discretion on rehearing. The judge had to weigh the consequences of granting or refusing the orders and decide where the greater risk of injustice lay. Such orders should be made only rarely, upon a clear demonstration that they were necessary for the fair disposal of the proceedings. The court should avoid converting the interlocutory hearing into a mini-trial, but not at the cost of injustice. The guidance in Rome v Punjab National Bank [1989] 2 All ER 136 was relevant. Elder v Carter (1890) 25 QBD 194 explained the purpose of the interlocutory production power.

The court accepted that assistance might properly be refused where proceedings had been commenced without reasonable grounds for believing that jurisdiction existed, but considered this case different. Millett LJ also expressed personal disquiet about a rule making jurisdiction depend on circumstances arising long after commencement of proceedings. That observation was obiter.

• Court of Appeal (Civil Division): Allowed the appeal, set aside Rattee J’s order, and restored the plaintiffs’ application for rehearing. The judgment is reported at [1997] EWCA Civ 1545.
• High Court, Chancery Division: Rattee J refused the plaintiffs’ application for third-party production under Order 38 Rule 13 and refused leave to appeal.